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What Investors Need to Know Before Rolling Over a 401k · The Financial Exchange Show

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  Speaker 1: is The Financial Exchange with Mike Armstrong and Paul Lane.
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  Speaker 2: Good morning, happy Tuesday, and welcome back here to The
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  Speaker 2: Financial Exchange. It's Mike, Paul, and Tucker with you on
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  Speaker 2: a Tuesday where markets are booming. barely budging. We've got
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  Speaker 2: the Nasdaq now up about a third of a percent,
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  Speaker 2: S & P up about a tenth, Dow also up
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  Speaker 2: about a tenth of a percent. We've got oil retreating
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  Speaker 2: a bit today. My interpretation there would be on a
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  Speaker 2: relatively muted set of sanctions announcements from the Treasury Secretary
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  Speaker 2: on trade with Iran, certainly leaving the door open to
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  Speaker 2: impose more in the way of financial Calamity for those
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  Speaker 2: who decide to trade with Iran, but for the time being,
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  Speaker 2: at least not announcing much of anything there. So we've
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  Speaker 2: got West Texas crude down to $ 82. 33 cents a barrel.
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  Speaker 2: Gold has been on a rally over the last week
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  Speaker 2: or two since the Treasury announcement of its intervention in
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  Speaker 2: longer-term debt. We ended the month of July with the
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  Speaker 2: price of gold sitting around $ 4, 100 per ounce. We're now
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  Speaker 2: sitting at $ 4, 690 per ounce. Flat today, but has moved
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  Speaker 2: up substantially over the course of the last month or so.
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  Speaker 2: Bond market, we've got yields falling pretty substantially here as
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  Speaker 2: they continue their slide this week. I would say more
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  Speaker 2: related to oil prices than related to anything that Besant's
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  Speaker 2: been doing recently. But the yield on the 10-year Treasury
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  Speaker 2: sitting at 4.652%. That brings the average 30-year fixed rate
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  Speaker 2: mortgage to, please hold. 6.78% as of the close yesterday.
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  Speaker 2: I have talked to people, you know, remember 6.78% is
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  Speaker 2: the average. Somebody just the other week is looking at
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  Speaker 2: a 6.5% mortgage that I've seen. So you'll have rates
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  Speaker 2: above and below that. And the price for a gallon
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  Speaker 2: of gas now sitting just below $ 4.
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  Speaker 1: 10 a gallon.
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  Speaker 3: 40969.
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  Speaker 2: Yeah, we talked about this yesterday, but that number of
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  Speaker 2: decimal points is just completely unnecessary. But thank you, AAA.
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  Speaker 2: As we take a look around here at this week,
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  Speaker 2: as I mentioned yesterday, we had the 1 p.m. press
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  Speaker 2: conference from Treasury Secretary Scott Besant on the state of
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  Speaker 2: sanctions on Iran. And there was a lot of bluster
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  Speaker 2: moving up to this. On Sunday, he published an op-ed
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  Speaker 2: in the Financial Times, which was mainly tailored to a
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  Speaker 2: foreign reader, because that's primarily who reads the Financial Times,
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  Speaker 2: is not a U.S.
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  Speaker 3: Consumer.
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  Speaker 2: There was a lot in the way of threats, and
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  Speaker 2: basically the statement that stuck with me was, the United
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  Speaker 2: States has been tolerating this type of thing for quite
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  Speaker 2: some time, of countries skirting these sanctions. We are no
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  Speaker 2: longer going to tolerate that.
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  Speaker 3: Monday rolled around, 1 p.m.
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  Speaker 2: Press conference, and you were left kind of with the
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  Speaker 2: sense that we don't want to blow up the entire
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  Speaker 2: financial system over this issue, at least for the time being.
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  Speaker 2: So that's the takeaway so far. Also in the backdrop,
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  Speaker 2: we've got Canadian tariffs. Talks broke down on Friday of
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  Speaker 2: last week. Sunday, we had the announcement from the president
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  Speaker 2: that the United States would be imposing new tariffs on
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  Speaker 2: Canadian goods at a rate of 50%. Canada immediately announced
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  Speaker 2: that they would be responding with their own set of tariffs.
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  Speaker 2: In response to that response, the president announced that there
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  Speaker 2: would be tariffs on auto auto manufacturing starting in January
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  Speaker 2: of twenty twenty seven. I think the only logical thing
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  Speaker 2: that you can do with this right now is to
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  Speaker 2: completely ignore it with the Canadians like.
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  Speaker 3: I do.
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  Speaker 2: Not envy the position that people that work in our
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  Speaker 2: northern states are in if they do trade or work
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  Speaker 2: in tourism for Canadian tourists.
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  Speaker 3: That's not an enviable position to be in.
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  Speaker 2: But I would have about as much confidence as a
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  Speaker 2: coin flip as to whether or not any of these
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  Speaker 2: tariffs ever get charged.
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  Speaker 4: I'm right with you.
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  Speaker 3: I don't know what to do with all this.
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  Speaker 4: No, I mean, there's only so much in our job
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  Speaker 4: stories that you can really focus on intently, and that's
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  Speaker 4: one that I've shelved and just sort.
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  Speaker 3: Of put on the back burner.
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  Speaker 2: I'll let you know if something happens on it. For
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  Speaker 2: the time being, relations with U.S. and Canada are worse
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  Speaker 2: than they were on Friday.
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  Speaker 4: Not great, Bob.
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  Speaker 5: Well, you saw the announcement 10 minutes ago.
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  Speaker 2: Yeah, Canada came up with their list of retaliatory terms.
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  Speaker 2: So they have come up with their own list of
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  Speaker 2: $ 20 billion worth of U.S.
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  Speaker 3: Goods. They had announced that they were going to do this.
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  Speaker 2: They've now presumably finalized that list, although I can't find
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  Speaker 2: a list of what it actually is. And based on that,
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  Speaker 2: the president yesterday had announced that they would impose auto
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  Speaker 2: tariffs in January. So as I mentioned, I actually said
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  Speaker 2: this on the program yesterday, one area that I would
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  Speaker 2: not want to be right now is auto manufacturing, especially
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  Speaker 2: the traditional GM, Ford's, of the world, so much of
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  Speaker 2: their stuff goes across the border between Canada and Mexico
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  Speaker 2: over and over again, that it seems very likely that
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  Speaker 2: if this thing really blows up, that's the area it's
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  Speaker 2: going to hit, and the announcement's been made whether or not,
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  Speaker 2: I mean, you've got four months to clean that up,
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  Speaker 2: so we will see what happens there. Other news this week,
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  Speaker 2: tomorrow after the bell, we've got Nvidia earnings. Hard for
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  Speaker 2: me to argue that any one company's earnings matter more
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  Speaker 2: to the AI trade than Nvidia's. So we will hear
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  Speaker 2: what they have to say on Wednesday. Simultaneously, it's pretty
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  Speaker 2: tough for them to surprise anybody because we know how
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  Speaker 2: much money all of their customers have decided to spend.
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  Speaker 2: So pretty clear what's going to happen there. But again,
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  Speaker 2: little beats or misses can really send the stock one
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  Speaker 2: direction or.
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  Speaker 3: Another these days. And then Friday, we will have.
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  Speaker 2: A press conference from Kevin Warsh out in Jackson Hole, Wyoming,
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  Speaker 2: at the symposium there.
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  Speaker 3: Where he really gets to pick and choose the topics
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  Speaker 3: he wants to tackle.
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  Speaker 5: Well, it's not really a press conference, right? It's just
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  Speaker 5: a speech.
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  Speaker 3: It's a speech, yeah.
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  Speaker 5: So there's no Q & A, right?
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  Speaker 3: Yeah, so is that the definition of a press conference,
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  Speaker 3: is if you have a Q & A?
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  Speaker 5: For the most part, yeah.
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  Speaker 2: So he's delivering a speech that's not at a press conference,
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  Speaker 2: because I don't know what a.
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  Speaker 5: Press conference is. The press will be there, I guess.
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  Speaker 5: But there's no Q & A. That's at least what
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  Speaker 5: Chuck said yesterday.
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  Speaker 3: Correct. There is no Q & A. Yeah.
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  Speaker 2: But I don't know the definition of a press conference.
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  Speaker 2: So he's talking and the world will listen on Friday.
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  Speaker 2: The big question here is what does he attempt to
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  Speaker 2: speak about?
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  Speaker 3: Right.
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  Speaker 2: Because he can very intentionally choose to completely ignore the
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  Speaker 2: Anything that Scott Besant at Treasury has announced over the
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  Speaker 2: course of the last several weeks, well within his rights.
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  Speaker 3: But if he does, I think people are going to
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  Speaker 3: be asking a lot of questions.
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  Speaker 4: Yeah, the criticism of Kevin Warsh has been swift from
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  Speaker 4: the investment community and from his prior speech as Fed chairman.
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  Speaker 4: Warsh has famously come out and said that he really
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  Speaker 4: wants to curtail a lot of the projection chatter and
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  Speaker 4: just general chatter that the Fed usually will undergo during
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  Speaker 4: a meeting cycle.
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  Speaker 2: To interrupt you for a second, Paul, I just want
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  Speaker 2: to point out that I think, in my opinion, the
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  Speaker 2: loudest criticism of Warsh has been coming from those who
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  Speaker 2: have a vested interest in him talking more.
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  Speaker 1: Sure.
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  Speaker 2: It's been from Bloomberg. It's been from fund managers that
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  Speaker 2: now need to hedge their book. The loudest criticism, anyway,
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  Speaker 2: is coming from those who make a living by latching
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  Speaker 2: on to every single word that the Fed chair says.
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  Speaker 3: And so, of course, they're criticizing it. That's their entire job.
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  Speaker 4: Very reminiscent of, you know, a local football coach, Bill Belichick,
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  Speaker 4: and his relationship with the media. No one in the media,
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  Speaker 4: why would you like dealing with him? But he was
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  Speaker 4: successful at his job. I'm not saying Warsh is going
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  Speaker 4: to be as successful.
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  Speaker 3: As Belichick, but it's a similar approach. I'm just wanting
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  Speaker 3: him to wear a..
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  Speaker 2: Crappy ratty sweatshirt hoodie with the sleeves cut off.
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  Speaker 4: We're on to the next meeting. We're on to the
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  Speaker 4: next Fed meeting.
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  Speaker 5: Inflation is at 2%.
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  Speaker 4: So what has been the... I can't get over Warsh
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  Speaker 4: just coming in a hoodie. That would be fantastic. I
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  Speaker 4: don't think he will be rocking that in Jackson Hole
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  Speaker 4: on Friday, but he is really trying to have less
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  Speaker 4: messaging come out. But ultimately the critics have stated that
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  Speaker 4: he has failed to answer even the most simple of
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  Speaker 4: simplest of questions that wouldn't require any type of forward guidance,
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  Speaker 4: in particular in the last meeting, while it was widely
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  Speaker 4: anticipated that the Fed would not make a move on
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  Speaker 4: interest rates, he would not answer as to why they
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  Speaker 4: made that decision, which was basically in the past, because
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  Speaker 4: he was coming out after the decision that Ari made,
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  Speaker 4: really no sort of commentary on their decision there. So
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  Speaker 4: What he says will be heavily scrutinized, and whether he
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  Speaker 4: takes a balanced approach or continues to be quite tight-lipped,
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  Speaker 4: that will all be in focus. It is probably worth noting,
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  Speaker 4: does that ultimately matter? I guess we did see a
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  Speaker 4: pretty dramatic sell-off last time in the bond market when
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  Speaker 4: he spoke, so perhaps there is some impact from that.
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  Speaker 4: But ultimately, it's what you do as Fed chair, not
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  Speaker 4: what you say.
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  Speaker 3: Yeah, ultimately..
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  Speaker 2: I think that you can get away with not addressing
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  Speaker 2: those questions about why they did this or why they
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  Speaker 2: did that. I think you can get away with some
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  Speaker 2: kind of confusing commentary that he made. There's one question
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  Speaker 2: that I think is pretty important for you to answer.
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  Speaker 2: You told everybody that part of the reason you did
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  Speaker 2: not feel the need to hike on interest rates was
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  Speaker 2: because the free market was doing your job for you.
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  Speaker 5: Mm-hmm.
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  Speaker 2: You now have a different branch of the U.S. government
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  Speaker 2: interfering with that free market and giving you a filtered
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  Speaker 2: message about interest rates. So what's your understanding of that now?
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  Speaker 2: If you refuse to, if you do not address that question,
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  Speaker 2: then you leave a lot of conjecture and possibility of
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  Speaker 2: about what people think is going to happen with inflation.
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  Speaker 2: If you can address that one question and say, you know, yeah,
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  Speaker 2: we're no longer getting that filter, you know, unfiltered message
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  Speaker 2: from markets, so we're going to have to do something else.
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  Speaker 2: That to me is very clear standing on how you
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  Speaker 2: feel about inflation. If you fail to address it, then
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  Speaker 2: I think there's going to be a number of investors
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  Speaker 2: who are just looking at this and saying, okay, Treasury
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  Speaker 2: and Fed are basically working together to print their way
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  Speaker 2: out of the deficit that we're in. And watch out,
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  Speaker 2: you're not going to like what that means. Let's take
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  Speaker 2: a quick break. When we come back, A little bit
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  Speaker 2: of a break from Fed talk. I want to talk
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  Speaker 2: about 401ks next on The Financial Exchange. mentioned Paul wants
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  Speaker 2: to talk about the, uh, the 401k, the primary savings
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  Speaker 2: vehicle of most American retirees, uh, what's going to provide
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  Speaker 2: them an income to supplement their social security down the road. And,
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  Speaker 2: and really, especially for high income earners, the best possible
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  Speaker 2: savings tool you can, uh, have available to you because
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  Speaker 2: of the limits of what you're able to put in to, uh,
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  Speaker 2: defer or eliminate taxes on future income. So, uh, The
• 13:09
  Speaker 2: 401k has become much more commonplace today. The Roth 401k
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  Speaker 2: as well. Constant questions that we get about which ones
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  Speaker 2: should I be contributing to? And it's a pretty complicated
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  Speaker 2: equation based on your tax rate. But I want to
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  Speaker 2: talk about the other end of this, which is what
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  Speaker 2: you do with it once you're done working. Because here's
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  Speaker 2: one thing I can confidently tell you. When you're done working,
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  Speaker 2: or really as soon as you hit 59 and a half,
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  Speaker 2: regardless of whether you're done working, you're going to get
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  Speaker 2: a bunch of advertisements and phone calls from financial people
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  Speaker 2: telling you that they would love to manage your money
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  Speaker 2: in that 401k. Why 59 and a half? Because you
• 13:50
  Speaker 2: really aren't eligible to move any of that money until
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  Speaker 2: you terminate your job at that employer or turn 59
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  Speaker 2: and a half in most cases. Then you're allowed to
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  Speaker 2: do this maneuver called a 401k rollover by which you
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  Speaker 2: take your 401k money, cash it out, and they send
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  Speaker 2: a check over to whoever's going to hold your IRA,
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  Speaker 2: which is a different account structure.
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  Speaker 3: And then from there, it's kind of the wild west.
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  Speaker 2: You can invest in anything compared to your 401k lineup,
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  Speaker 2: which is often composed of maybe 20 different investment options.
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  Speaker 3: That opportunity of choice can.
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  Speaker 2: Sometimes represent a false promise, though, I think, in terms
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  Speaker 2: of what actually happens, because for the average person that
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  Speaker 2: rolls money out of their 401k, They end up paying
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  Speaker 2: a lot more in fees. And whether or not their
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  Speaker 2: investment performance is any better depends entirely on what they
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  Speaker 2: end up doing.
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  Speaker 3: With those funds. Yeah.
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  Speaker 4: The most important thing with this issue is on investment
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  Speaker 4: professionals to make sure that they are just educating the
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  Speaker 4: end client as to what options that they have.
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  Speaker 3: Forget that.
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  Speaker 2: Yes, it is on the investment professional. They absolutely need
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  Speaker 2: to do that, and they should. But- I'm sorry, average
• 15:03
  Speaker 2: listener out there. You're going to find one that's not
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  Speaker 2: going to.
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  Speaker 3: Oh, sure.
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  Speaker 6: Sure.
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  Speaker 2: Like, you know, not everybody's going to actually follow the,
• 15:10
  Speaker 2: you know, the right rules and you're going to meet
• 15:13
  Speaker 2: with people that don't adhere to those rules because they
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  Speaker 2: are just insurance professionals and they have a different set
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  Speaker 2: of rules that apply to them. Um, it's on you
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  Speaker 2: to educate yourself, unfortunately, like, you know, actually, no, fortunately,
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  Speaker 2: like the, You should be educated about your main retirement
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  Speaker 2: savings vehicle and understand this stuff.
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  Speaker 3: So a few things to know.
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  Speaker 2: One, most of the time when you do a rollover,
• 15:35
  Speaker 2: if you're having somebody else handle that money for you
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  Speaker 2: because you want that guidance, it's going to be more expensive.
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  Speaker 3: I've looked at this a few thousand times. It's usually
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  Speaker 3: more expensive. Two, it is irreversible.
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  Speaker 2: If you are done working at that company and you
• 15:50
  Speaker 2: decide to roll your money out of your employer plan,
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  Speaker 2: you ain't going back.
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  Speaker 3: It is irreversible.
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  Speaker 2: You cannot put the money back in unless you go
• 15:57
  Speaker 2: back and work for that employer.
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  Speaker 4: You could roll it into another 401k employer's plan if
• 16:02
  Speaker 4: you continue to work.
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  Speaker 3: Absolutely, right?
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  Speaker 2: You can move it from one to another, but you
• 16:05
  Speaker 2: cannot go put it back at that employer's plan. And
• 16:08
  Speaker 2: sometimes these things offer some pretty nice features. Pretty rare
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  Speaker 2: these days, but you've got company stock in that 401k.
• 16:16
  Speaker 3: You go and liquidate it.
• 16:17
  Speaker 2: You have given up your ability to do certain special
• 16:20
  Speaker 2: tax transactions that were in there.
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  Speaker 1: And so..
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  Speaker 2: Here's the critical piece with all of this. As I said,
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  Speaker 2: when you turn 59 and a half or when you retire,
• 16:29
  Speaker 2: there's going to be a litany of different financial professionals
• 16:33
  Speaker 2: that would love to get a hold of your money.
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  Speaker 2: And ultimately, it's really on you to educate yourself about
• 16:39
  Speaker 2: whether or not that's in your best interest. Your financial
• 16:41
  Speaker 2: professional should help you with that. They should help educate
• 16:44
  Speaker 2: you on all of these things. But you've first and
• 16:47
  Speaker 2: foremost got to take care of yourself when it comes
• 16:50
  Speaker 2: to all of this. And so that's my That's my
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  Speaker 2: spiel for the day is make sure you understand what
• 16:57
  Speaker 2: it's costing you to do what you're doing today, what
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  Speaker 2: it's going to cost you in the future, and take
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  Speaker 2: that stuff seriously because this is your main retirement vehicle.
• 17:06
  Speaker 2: This is what is going to pay your bills for
• 17:08
  Speaker 2: sometimes the next 30 years. If you have questions about
• 17:11
  Speaker 2: your retirement plan and you're trying to understand your options better,
• 17:15
  Speaker 2: Give us a ring at 800-393-4001. As you can probably tell,
• 17:21
  Speaker 2: we take this process pretty seriously and really focus on
• 17:26
  Speaker 2: educating clients about what their options truly are and fundamentally
• 17:31
  Speaker 2: protecting themselves from all sorts of issues down the road. Again,
• 17:34
  Speaker 2: that number, if you have questions about your retirement options, 800-393-4001.
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  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 17:44
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 17:47
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 17:50
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 17:52
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 17:56
  Speaker 1: advisory services.
• 17:57
  Speaker 2: AI can't solve retirement anxiety. That's a job for financial advisors.
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  Speaker 3: God, I hope so.
• 18:04
  Speaker 2: I'm not convinced, by the way, but I sure do
• 18:06
  Speaker 2: hope so. I've made the argument to myself several times
• 18:10
  Speaker 2: over the last few years that the closer you are
• 18:11
  Speaker 2: to working with real-life human beings, the more insulated you
• 18:15
  Speaker 2: might be from AI threatening your job in the future.
• 18:20
  Speaker 2: But I saw an estimate recently that between a quarter
• 18:24
  Speaker 2: and half of adults have used AI for therapy in
• 18:28
  Speaker 2: the last couple of years.
• 18:30
  Speaker 3: Adults.
• 18:31
  Speaker 2: To which I say, you know, obviously everybody defines therapy
• 18:34
  Speaker 2: a little bit differently. So this might not be using
• 18:37
  Speaker 2: a licensed therapy AI app, but that's pretty.
• 18:41
  Speaker 3: Close to human beings.
• 18:42
  Speaker 2: And seemingly a lot of people are comfortable enough to
• 18:47
  Speaker 2: talk to an AI agent about, you know, their innermost
• 18:51
  Speaker 2: concerns and, you.
• 18:53
  Speaker 3: Know, therapies.
• 18:55
  Speaker 2: So I guess my takeaway is I am unconvinced that
• 18:58
  Speaker 2: any job is fully insulated from this, and I sure
• 19:01
  Speaker 2: hope that financial advisors are because that's how I make
• 19:03
  Speaker 2: my living. But I don't know, and I don't think
• 19:06
  Speaker 2: anybody should know, or at least feel confident that they know.
• 19:10
  Speaker 3: Quick break. Wall Street Watch coming up next.
• 19:17
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:22
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:27
  Speaker 3: Right now, for Wall.
• 19:28
  Speaker 1: Street Watch, tracking the stocks, the data, and the headlines
• 19:32
  Speaker 1: driving markets so far today, right here on the Financial
• 19:35
  Speaker 1: Exchange Radio Network.
• 19:36
  Speaker 6: Markets are slightly in the green as investors ready for
• 19:39
  Speaker 6: NVIDIA's anticipated earnings. Tomorrow afternoon, right now, the Dow is
• 19:44
  Speaker 6: up about a tenth of a percent or 69 points higher.
• 19:48
  Speaker 6: S & P 500 up about a quarter. percent, 17
• 19:51
  Speaker 6: points higher. NASDAQ up over half a percent, 143 points up.
• 19:56
  Speaker 6: Russell 2000 up over a third of a percent. Ten-year
• 20:00
  Speaker 6: treasury yield down six basis points at 4.639%. And oil
• 20:02
  Speaker 6: down over 3% lower. Trading at $ 82 a barrel. Breaking
• 20:10
  Speaker 6: news this hour after Canada said it plans to impose
• 20:12
  Speaker 6: tariffs of 15 to 50 percent on about $ 20 billion
• 20:17
  Speaker 6: of U.S. goods beginning September 8th following the collapse of
• 20:21
  Speaker 6: trade talks. Meanwhile, crypto stocks, including strategy Coinbase and Robinhood,
• 20:25
  Speaker 6: are seeing gains on the day as Bitcoin extended its
• 20:29
  Speaker 6: rally to $ 80, 000 a Elsewhere, shares in Dick's Sporting Goods
• 20:34
  Speaker 6: continue to tumble, now down 28% after the retailer missed
• 20:39
  Speaker 6: second quarter earnings expectations amid what it called a challenging environment.
• 20:43
  Speaker 6: The retailer said Foot Locker was largely impacted by those
• 20:47
  Speaker 6: conditions and lowered its comparable sales outlook. Raymond James upgraded AMD,
• 20:52
  Speaker 6: sending shares up in the chipmaker by 5%. And Intuit
• 20:57
  Speaker 6: will report earnings after today's closing bell. I'm Tucker Silva
• 21:01
  Speaker 6: and that is Wall Street Watch.
• 21:04
  Speaker 2: In what would be welcome news for American consumers, Bloomberg
• 21:08
  Speaker 2: reporting that Walmart and others planning to lower prices, specifically
• 21:14
  Speaker 2: in groceries. That's after BLS reports that in July, food
• 21:18
  Speaker 2: prices at home are up about 2.7% compared to this
• 21:22
  Speaker 2: time last year. What does Bloomberg anyway argue is the
• 21:27
  Speaker 2: reason behind these price cuts that they're enacting?
• 21:30
  Speaker 4: The Germans are coming, Mike.
• 21:31
  Speaker 3: For our groceries? Yes, in a way they are.
• 21:36
  Speaker 4: So the reason I make that joke is Aldi, which
• 21:40
  Speaker 4: is a German brand, has started to make more and
• 21:44
  Speaker 4: more inroads. I mean, they've been around in the U.S.
• 21:45
  Speaker 4: since 1976, but now they plan to have just about 3,200
• 21:51
  Speaker 4: stores by the end of 2028. That would overtake Kroger
• 21:55
  Speaker 4: and gets it pretty close to the number of Walmart
• 21:57
  Speaker 4: stores that known as super centers that are around the country.
• 22:02
  Speaker 4: And it's pretty well documented on this program that I
• 22:04
  Speaker 4: am not the most nuanced grocery shopper.
• 22:08
  Speaker 3: Yeah, you figured a gallon of milk costs $ 15.
• 22:10
  Speaker 5: No, I did not.
• 22:11
  Speaker 3: It was garlic. But back off. It was garlic. I
• 22:14
  Speaker 3: wish I had that drop.
• 22:16
  Speaker 4: I'm so glad that audio doesn't exist because that would
• 22:19
  Speaker 4: definitely go on the wall of shame.
• 22:20
  Speaker 5: 7 a clove?
• 22:21
  Speaker 3: But..
• 22:24
  Speaker 4: I do read about, I don't go in them, but
• 22:27
  Speaker 4: I read about grocery stores. for this program every once
• 22:30
  Speaker 4: in a while. And my father-in-law works in the business.
• 22:35
  Speaker 4: So I like to stay apprised of what's going on.
• 22:38
  Speaker 4: And there is an Aldi that is going to be
• 22:41
  Speaker 4: near my location. And I did notice that I was
• 22:44
  Speaker 4: at the eye doctor, but happened to walk over to
• 22:46
  Speaker 4: the Aldi. Didn't go in. It wasn't open yet. That
• 22:49
  Speaker 4: they charge 25 cents just for one of those carriages.
• 22:52
  Speaker 1: Shopping carts.
• 22:53
  Speaker 3: Yeah. Really? Oh, yeah.
• 22:54
  Speaker 1: Yes.
• 22:55
  Speaker 3: That's what Aldi's famous for.
• 22:57
  Speaker 2: You have to have a quarter on you to get
• 22:58
  Speaker 2: a shopping cart.
• 22:59
  Speaker 4: That was a big turnoff for someone who never goes
• 23:02
  Speaker 4: to the grocery.
• 23:03
  Speaker 3: Yeah, I don't. You don't go to Aldi.
• 23:05
  Speaker 4: So how they command, to bring it back full circle,
• 23:08
  Speaker 4: how they command these low prices is for maneuvers like that,
• 23:11
  Speaker 4: where they don't need nearly as much square footage as
• 23:14
  Speaker 4: a Walmart super center. They only have about a couple
• 23:18
  Speaker 4: thousand items of SKUs, they call them, versus Walmart, which
• 23:22
  Speaker 4: you're talking about 100,000 different items that you have to Brewster.
• 23:26
  Speaker 3: So Walmart is clear.
• 23:26
  Speaker 2: So far as I could tell from the two times
• 23:28
  Speaker 2: I've been in Aldi, I don't think anybody works there either.
• 23:30
  Speaker 3: So that's helpful. Ghost setups.
• 23:34
  Speaker 4: So Walmart is absolutely feeling the pressure. And I was wondering,
• 23:37
  Speaker 4: they had been really active from what we cover on
• 23:40
  Speaker 4: the show with all these rollbacks and you covered it
• 23:42
  Speaker 4: to lead this segment here. They're really feeling the pressure
• 23:46
  Speaker 4: in the grocery space from some of these competitors like
• 23:50
  Speaker 4: Aldi where they're coming after pricing. And that is great
• 23:52
  Speaker 4: for US consumers because you've seen food costs go up 25,
• 23:56
  Speaker 4: 30% over the last five or six years with the
• 24:00
  Speaker 4: inflation that we've been dealing with. So to have more
• 24:02
  Speaker 4: entrance into the market is something that is going to
• 24:06
  Speaker 4: be welcome for sure. Yeah.
• 24:08
  Speaker 3: I don't know.
• 24:08
  Speaker 2: I don't know that if I'm Aldi, which by the way,
• 24:11
  Speaker 2: also owns Trader Joe's, if you're not familiar there, the
• 24:14
  Speaker 2: same company.
• 24:15
  Speaker 4: Oh no, that's a little, I think that's a different
• 24:17
  Speaker 4: angle of- No? I'm going to have to double-check that.
• 24:20
  Speaker 3: Okay.
• 24:20
  Speaker 4: It was a split between two of those German brothers.
• 24:23
  Speaker 1: Okay.
• 24:23
  Speaker 3: Let me just make sure. Okay.
• 24:25
  Speaker 2: But they were somehow related, whether or not they are
• 24:28
  Speaker 2: still today. I'm not sure that a price.
• 24:32
  Speaker 3: War with Walmart is going to work out in your favor.
• 24:34
  Speaker 2: So, one, Walmart does have some firepower because they just
• 24:38
  Speaker 2: got about a $ 3 billion tariff refund, so they can
• 24:40
  Speaker 2: apply that to lower costs. But If you're Walmart and
• 24:45
  Speaker 2: your core grocery business becomes under threat, you can make
• 24:50
  Speaker 2: up all of that and more temporarily by profits on
• 24:55
  Speaker 2: your other items in that store that Aldi just doesn't have.
• 24:57
  Speaker 3: You are a pure play grocery store.
• 24:59
  Speaker 2: Yes, you can have lower costs because you have a
• 25:02
  Speaker 2: smaller footprint and fewer items available, but I don't know
• 25:05
  Speaker 2: if a price war with Walmart is going to work
• 25:07
  Speaker 2: out for anybody in the competition space. That seems like
• 25:11
  Speaker 2: a tough battle to go up on.
• 25:14
  Speaker 1: It is.
• 25:14
  Speaker 4: And, uh, it's two different brothers that, uh, that split
• 25:19
  Speaker 4: that had, uh, Aldi and, uh, Aldi Norden, Aldi's sword,
• 25:24
  Speaker 4: I guess. Uh, yes, exactly.
• 25:28
  Speaker 3: Yeah. So that means North and South.
• 25:31
  Speaker 1: Yes.
• 25:31
  Speaker 4: Yes, it does.
• 25:33
  Speaker 3: Yes. German lesson for the day for everybody. Thank you.
• 25:36
  Speaker 2: Uh, Other local brand here, Dunkin', apparently getting ready to
• 25:41
  Speaker 2: join the AI, the IPO bonanza. Inspire Brands is the
• 25:46
  Speaker 2: owner of Dunkin'. They also own Arby's. It's unclear to
• 25:50
  Speaker 2: me if they would be packaging those together as an
• 25:52
  Speaker 2: IPO or just spinning out one of them. Could get
• 25:56
  Speaker 2: pushed into early 2027, but may be happening this year.
• 26:00
  Speaker 2: Another smart ring maker, Aura. They're local as well.
• 26:04
  Speaker 3: They are local. That's right.
• 26:05
  Speaker 4: They're Boston-based.
• 26:07
  Speaker 2: So those fitness tracking devices, if you've seen those before
• 26:10
  Speaker 2: or heard of them.
• 26:11
  Speaker 4: Or if your wife suckered you into buying one for
• 26:13
  Speaker 4: their anniversary coming up.
• 26:14
  Speaker 1: Aura?
• 26:15
  Speaker 5: I'm seeing San Francisco.
• 26:17
  Speaker 3: Really?
• 26:17
  Speaker 2: Yeah.
• 26:19
  Speaker 3: No, that's Whoop.
• 26:20
  Speaker 5: Yeah, Whoop.
• 26:22
  Speaker 4: Sorry about that.
• 26:24
  Speaker 2: The company is expected to fetch an $ 11 billion valuation.
• 26:28
  Speaker 2: I don't have details on what Duncan would be looking at,
• 26:31
  Speaker 2: but presumably a whole bunch of Massachusetts-based... potential investors there just.
• 26:37
  Speaker 4: Clamoring for shares. Well, yeah, Dunkin' was public before and
• 26:39
  Speaker 4: then was taken private.
• 26:41
  Speaker 5: They were acquired by Inspire Brands in 2020.
• 26:43
  Speaker 4: Yeah, and so now Inspire is looking to spin that
• 26:46
  Speaker 4: back out and get paid, basically, on it by taking
• 26:48
  Speaker 4: them public, you'd think, here with this approach. But the
• 26:53
  Speaker 4: Oura Ring thing, it's close to home because my wife
• 26:55
  Speaker 4: did make me buy her one, and I just am
• 26:57
  Speaker 4: not so sold on it as a company, but cheap.
• 27:02
  Speaker 4: She likes it. You know, the sleep-trapping thing for us
• 27:04
  Speaker 4: with young kids.
• 27:05
  Speaker 2: Well, the nice thing is if they completely go out
• 27:06
  Speaker 2: of business, then you still have a beautiful, completely non-functioning
• 27:10
  Speaker 2: ring that she can wear.
• 27:11
  Speaker 3: Exactly.
• 27:13
  Speaker 4: I just don't know why we need to know when
• 27:15
  Speaker 4: we have young children that we didn't sleep well.
• 27:18
  Speaker 5: Exactly.
• 27:18
  Speaker 4: It's pretty self-explanatory that we're not going to get good sleep.
• 27:24
  Speaker 4: And I know it has other functionalities. But that is
• 27:28
  Speaker 4: the main one that gets mentioned.
• 27:30
  Speaker 3: The main functionality here, Paul, is that you love your wife,
• 27:32
  Speaker 3: and so you bought her the.
• 27:33
  Speaker 1: Ring that she wanted.
• 27:34
  Speaker 3: I did. That's the main story here that matters.
• 27:38
  Speaker 2: I think my sister and brother-in-law have them, and tell
• 27:43
  Speaker 2: me it's the best thing in the world. There's some
• 27:45
  Speaker 2: way that he apparently directly loads his aura ring data
• 27:49
  Speaker 2: into Claude to give him like a daily summary of
• 27:53
  Speaker 2: what's going on in his life. That seems like a
• 27:56
  Speaker 2: lot to me. I don't know, but I just, yeah,
• 27:59
  Speaker 2: I'm with you. I don't need that much information.
• 28:02
  Speaker 4: No, you just can kind of feel it out. But
• 28:04
  Speaker 4: I don't know. I guess maybe with all the information
• 28:07
  Speaker 4: age that we're all going to be acclimated to with AI,
• 28:10
  Speaker 4: maybe this becomes more.
• 28:11
  Speaker 2: If you can tell me that I'm at an elevated
• 28:13
  Speaker 2: heart attack risk or something like that half an hour
• 28:15
  Speaker 2: before it happens, boom.
• 28:16
  Speaker 5: Yeah, seriously.
• 28:17
  Speaker 3: That's the technology I need. Apple Watches have come through
• 28:20
  Speaker 3: on that. I think a few of them. Fall detection,
• 28:23
  Speaker 3: I'm with you. Actually, you know what?
• 28:25
  Speaker 2: Here's the main case that I'll make for these smart devices.
• 28:29
  Speaker 2: Family member of mine. in her 40s, had a stroke
• 28:34
  Speaker 2: at home. Completely unpredicted, middle of the night. Fortunately, husband
• 28:39
  Speaker 2: found her very quickly and.
• 28:41
  Speaker 3: You know, full recovery.
• 28:42
  Speaker 2: She was supposed to be on a business trip in
• 28:44
  Speaker 2: New Jersey that same day that got canceled, in which
• 28:47
  Speaker 2: case she would not have been found for likely hours
• 28:51
  Speaker 2: and a very different outcome. So that's my case for
• 28:53
  Speaker 2: smart devices. They can catch you when you fall. Not
• 28:56
  Speaker 2: catch you, but detect when.
• 28:57
  Speaker 3: You fall and alert somebody about them.
• 28:59
  Speaker 2: So that was the day that we actually, my wife
• 29:01
  Speaker 2: and I, got smart devices for that specific reason.
• 29:05
  Speaker 3: Quick break. When we come back, Stack Roulette is next.
• 29:08
  Speaker 1: Get real-time financial insight as news breaks. The Financial Exchange
• 29:13
  Speaker 1: is live on X. Watch the show and follow us
• 29:15
  Speaker 1: for the most up-to-date business news you need to know.
• 29:18
  Speaker 1: This is the Financial Exchange.
• 29:30
  Speaker 2: Time now for a bit of stack roulette. I'll kick
• 29:34
  Speaker 2: things off here, Paul. There's a piece in Bloomberg today.
• 29:37
  Speaker 2: There's only one way to make AI safe for kids.
• 29:40
  Speaker 2: Abby McCloskey lays out that in spite of OpenAI opening
• 29:45
  Speaker 2: new teen chat GPT options and these newer versions are
• 29:53
  Speaker 2: allegedly supposed to do a better job in terms of
• 29:58
  Speaker 2: I mean, heck, AI has been accused of assisting with suicides,
• 30:02
  Speaker 2: all sorts of deepfakes, sexually explicit conversations with children, like,
• 30:06
  Speaker 2: you know, pretty horrific stuff. And these newer versions are
• 30:09
  Speaker 2: supposed to prevent some of that. She lays out that
• 30:11
  Speaker 2: in spite of this, like, you know, the only real
• 30:13
  Speaker 2: option here is to limit exposure generally, which actually brings
• 30:18
  Speaker 2: me to a firsthand experience. A child care provider of
• 30:22
  Speaker 2: ours was playing with our kids and they asked her
• 30:27
  Speaker 2: to use ChatGPT to turn them into Navi, the people
• 30:33
  Speaker 2: from the Avatar movie. And so she took a picture
• 30:35
  Speaker 2: of it, did it, and sent us it. And I
• 30:37
  Speaker 2: had to have a conversation like, hey, you know, cool,
• 30:40
  Speaker 2: this seems like it was a fun activity, but I
• 30:42
  Speaker 2: don't really want pictures of my kids being.
• 30:44
  Speaker 3: Loaded into a free version of AI.
• 30:46
  Speaker 2: I have no idea what's happening with that. Like, let's
• 30:49
  Speaker 2: just not do that going forward. And maybe that's a
• 30:52
  Speaker 2: conservative approach, I don't know. But I'm most interested to
• 30:56
  Speaker 2: hear how, like, If you're a parent of a 16-year-old
• 30:59
  Speaker 2: right now, what are you going through.
• 31:01
  Speaker 3: With this stuff?
• 31:02
  Speaker 2: Because, I mean, as far as I can tell, there
• 31:06
  Speaker 2: have been multiple reported cases of teenagers creating explicit photos
• 31:11
  Speaker 2: of classmates and distributing them throughout schools. This seems like
• 31:17
  Speaker 2: an absolute nightmare to me in terms of this technology
• 31:21
  Speaker 2: just making life extraordinarily difficult for parents of young teenagers.
• 31:27
  Speaker 2: And then furthermore, like if we think social media and
• 31:31
  Speaker 2: the internet made us stupid, man, this seems.
• 31:34
  Speaker 3: Like it's going to make us way more dumb.
• 31:36
  Speaker 2: Like at least when I was Googling something in middle school,
• 31:40
  Speaker 2: I'd have to click through a few links and read
• 31:42
  Speaker 2: the material to get to a conclusion. Now AI is
• 31:46
  Speaker 2: just going to tell me the answer. And by the way,
• 31:48
  Speaker 2: it's going to be wrong a good 30% of the
• 31:50
  Speaker 2: time because it's pulling from some garbage source on the
• 31:53
  Speaker 2: internet that's not vetted.
• 31:55
  Speaker 3: And I made up 30%.
• 31:56
  Speaker 2: I have no idea how frequently it's going to be wrong.
• 32:01
  Speaker 2: But it's going to pull sources that who knows what
• 32:06
  Speaker 2: the vetting is.
• 32:07
  Speaker 3: And you disagree? Yeah. Yeah.
• 32:10
  Speaker 4: I think you're way too high. And these models are,
• 32:14
  Speaker 4: in terms of their ability to solve complex mass proofs
• 32:17
  Speaker 4: and stuff like that, they've gotten extremely sophisticated. So on
• 32:19
  Speaker 4: verifiable domains, they're not going to mess up how to
• 32:23
  Speaker 4: deal with writing a paper on Old Man and the Sea.
• 32:25
  Speaker 4: There is so much internet text that they've been trained
• 32:28
  Speaker 4: on that they're not getting fed conspiracy theories from Reddit
• 32:31
  Speaker 4: on what Ernest Hemingway wrote, to give a hypothetical.
• 32:34
  Speaker 3: That someone used it for.
• 32:35
  Speaker 2: So I guess the question, one of the big downfalls of,
• 32:39
  Speaker 2: I believe, social media has been that you just create
• 32:43
  Speaker 2: an echo chamber of your own thoughts.
• 32:45
  Speaker 3: Do you think that AI is actually going to solve
• 32:47
  Speaker 3: some of that?
• 32:47
  Speaker 4: No, that will be made worse. That will be made
• 32:50
  Speaker 4: worse because if you do play around with these models,
• 32:53
  Speaker 4: they are very much built on reaffirming your assumptions and
• 32:57
  Speaker 4: your preconceived thoughts. You have to really think about the
• 33:01
  Speaker 4: context you give it. This applies for anything that you
• 33:04
  Speaker 4: search with AI to try and be balanced and try
• 33:06
  Speaker 4: and give a little bit more of a both sides
• 33:10
  Speaker 4: to any argument. When it comes to schoolwork, I'm in
• 33:14
  Speaker 4: agreement with your general point that if the premise behind
• 33:17
  Speaker 4: artificial intelligence is to make intelligence abundant so that it
• 33:21
  Speaker 4: is basically a commodity, which is the scary part for
• 33:25
  Speaker 4: knowledge-based work, but ultimately it's a huge benefit, you would think,
• 33:29
  Speaker 4: just to have all the access, but there are those
• 33:32
  Speaker 4: scary side effects. If intelligence is just abundance everywhere that
• 33:36
  Speaker 4: you can get it and have the ability to build
• 33:39
  Speaker 4: out your school papers or, you know, really assist you
• 33:41
  Speaker 4: from a academic perspective. Like what do you, the student
• 33:45
  Speaker 4: actually learn?
• 33:46
  Speaker 6: Yeah.
• 33:46
  Speaker 2: I am fascinated to hear how like high school teachers
• 33:49
  Speaker 2: and college teachers deal with this because blue books are back.
• 33:52
  Speaker 3: Yeah. Blue books.
• 33:53
  Speaker 2: Like I would probably just say, Hey, our assignments are going,
• 33:58
  Speaker 2: if you have to write something, you're doing it in
• 34:00
  Speaker 2: front of me.
• 34:00
  Speaker 5: Exactly. It's live.
• 34:02
  Speaker 4: It's on a stripped down version of, you know, laptop.
• 34:05
  Speaker 4: If you want to type it out over a span
• 34:07
  Speaker 4: of time, it's a whole new, Challenge to try and
• 34:10
  Speaker 4: figure out, or you really have to make the workload
• 34:15
  Speaker 4: more on them coming to conclusions and interpreting things and
• 34:19
  Speaker 4: less these noble memorizing facts, I would think. But I
• 34:24
  Speaker 4: don't have an easy answer for it either. Really, really
• 34:27
  Speaker 4: challenging to figure out. Hotels are being flipped at a
• 34:31
  Speaker 4: rapid rate here. Investors are snapping up shabby hotels and
• 34:36
  Speaker 4: whipping them into shape. This is a piece here from
• 34:37
  Speaker 4: the Wall Street Journal. Hotel sales have risen 28% in
• 34:41
  Speaker 4: the first half of the year as more owners are
• 34:44
  Speaker 4: looking to sell to buyers who are going to spend
• 34:46
  Speaker 4: the money on upgrades. You have a lot of probably
• 34:49
  Speaker 4: hotel owners that maybe had locked in at lower financing costs,
• 34:53
  Speaker 4: but then have had to deal with the fact that
• 34:55
  Speaker 4: we've been in a higher interest rate environment for the
• 34:57
  Speaker 4: last several years here and perhaps unwilling to take on
• 35:01
  Speaker 4: more debt to finance these necessary renovations and rebuilds at hotels.
• 35:06
  Speaker 4: So as a result, you've got new buyers coming in
• 35:09
  Speaker 4: to the market. There really is been a scarcity of
• 35:13
  Speaker 4: new hotels coming online. They've been able to sort of
• 35:16
  Speaker 4: take advantage, these investors, of the fact that there are
• 35:19
  Speaker 4: only so many hotels out there and the cost of
• 35:23
  Speaker 4: building a new one is really exorbitant. I came away,
• 35:29
  Speaker 4: stayed at a hotel over the weekend for a wedding
• 35:31
  Speaker 4: with my wife and this was a middle-of-the-road three-star hotel
• 35:35
  Speaker 4: in Connecticut. Still commanded 400 some odd dollars a night
• 35:40
  Speaker 4: for this hotel stay and it was sticker shock to
• 35:45
  Speaker 4: my wife and I, because it was a very mediocre hotel.
• 35:48
  Speaker 4: And part of this is the probably inflation that we
• 35:51
  Speaker 4: haven't just thought about. Cause we don't stay at hotels
• 35:53
  Speaker 4: frequently really anymore over the last four or five years
• 35:56
  Speaker 4: where I kind of thought that would have been a
• 35:57
  Speaker 4: 200 to $ 250 a night stay. But if you're in
• 36:01
  Speaker 4: new England, I guess, and I just was looking up,
• 36:03
  Speaker 4: it was in Connecticut. Um, you know, the average, uh,
• 36:07
  Speaker 4: it was in the Norwalk area. I mean, not on,
• 36:11
  Speaker 4: we're far from the water there, but, uh, The average
• 36:14
  Speaker 4: New England hotel is anywhere from $ 250 to $ 390 a
• 36:17
  Speaker 4: night off a quick Google search there. And perhaps this
• 36:21
  Speaker 4: is some of it, is the inflationary pressure on limited
• 36:24
  Speaker 4: hotel supply.
• 36:25
  Speaker 3: Yeah, I mean, thinking through it.
• 36:27
  Speaker 2: So a 28% jump in the volume of sales is
• 36:29
  Speaker 2: a huge increase in one year. That's a big, big jump.
• 36:33
  Speaker 2: I do have to imagine that there was just a
• 36:35
  Speaker 2: lack of activity for a good three years during COVID.
• 36:38
  Speaker 5: Right.
• 36:40
  Speaker 3: It was really called into question, like how much travel
• 36:42
  Speaker 3: is going to be?
• 36:43
  Speaker 2: Are people going to make this permanent shift to Airbnb?
• 36:46
  Speaker 3: All of that stuff's been put to bed now. The
• 36:47
  Speaker 3: answer is no. People are returning to.
• 36:49
  Speaker 2: The same types of travel they used to do. But
• 36:51
  Speaker 2: there was a period of time where no activity was happening.
• 36:54
  Speaker 2: The same owners of this type of real estate might
• 36:56
  Speaker 2: also own some other real estate.
• 36:58
  Speaker 3: That's been underwater.
• 36:59
  Speaker 2: So I think you're probably just getting to a normalization
• 37:02
  Speaker 2: stage here and- Yeah, there's probably a whole bunch of
• 37:05
  Speaker 2: hotels that were underinvested in for a few years during
• 37:07
  Speaker 2: that period of time, and maybe you can scrape up
• 37:09
  Speaker 2: a deal. They also cite, again, the AI trade having
• 37:14
  Speaker 2: something to do with this.
• 37:15
  Speaker 3: I don't know.
• 37:17
  Speaker 2: The argument is that a lot of people are going
• 37:19
  Speaker 2: to be staying at hotels while building the data centers.
• 37:23
  Speaker 2: Seems a bit far-fetched to me, but I guess I
• 37:25
  Speaker 2: can connect the dots. That's all the time we have
• 37:28
  Speaker 2: for today. Markets have moved up a little bit as
• 37:30
  Speaker 2: we close in on the noon hour. We'll be back
• 37:33
  Speaker 2: tomorrow after the bell tomorrow, NVIDIA earnings. Have a great day,
• 37:37
  Speaker 2: and we'll see you tomorrow, folks.